Updated CFI Research on State and Local Elections:
New 2012 Data Reinforces Previous Findings

Public Matching Funds in NY State, Reversing the Financial Influence of Small & Large Donors, Would Leave the Candidates “Whole” While Costing New Yorkers only $2/year

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New York State’s candidates for the legislature in 2012 raised 74% of their money from donors who gave them $1,000 or more, and from interest groups. Only 8% came from donors who gave $250 or less. The balance between the state’s small versus large donors was almost the same in 2012 as in 2010 and 2008.

“Until now, big donors have dominated the Empire State’s politics,” said CFI’s Executive Director Michael J. Malbin, who is also a professor of political science at the University at Albany (SUNY). “This study shows that making small donors the linchpins of candidate financing would come at a very low cost when compared to the benefits.”

Gov. Andrew Cuomo of New York has recommended that the state reduce candidates’ dependence on big donors by adopting a system of small-donor matching funds similar to New York City’s. The city provides $6 in matching funds for each of the first $175 that a donor gives to a candidate participating in its voluntary system. (Gov. Cuomo also proposed lower contribution limits, improved disclosure, and strengthened enforcement.) Assembly Speaker Sheldon Silver has reintroduced a bill from previous years that would provide six-for-one matching funds for a donor’s first $250, with lower contribution limits. While the details of this proposal may change, and the Senate and Governor may put forward their own proposals, this one is a sound basis for analysis.

CFI’s previous studies of New York have shown that matching funds could have a profound effect on the state’s election financing. The first was a broad peer-reviewed
policy analysis in Election Law Journal.
The second showed that small donors would likely be responsible for a majority of the candidates’ funds under a small donor matching system.
A third, published jointly with the Brennan Center, showed that New York City’s system brings a far more diverse pool of donors into the system than traditional fundraising.
A fourth showed that the percentage of New York population giving a contribution in any amount is among the nation’s lowest.
Finally, this study is a revision of one previously published that was based only on data from 2010. The results based on 2012 data are virtually unchanged.

Most of CFI’s earlier studies focused on the potential benefits of small donor matching funds. This one addresses concerns about two of the potential costs. It shows, first, that the financial costs have been vastly overstated. Second, it shows that almost all candidates for the state legislature would be better off with public matching funds replacing high contribution limits than they are with the status quo.

FINANCIAL COST

Perhaps the most controversial claim is about financial cost. For example, the Senate’s Republican Leader, Dean Skelos, referred in 2012 to the cost of a public matching system as being $200 million per election or $100 million per year. In contrast, the Campaign Finance Institute’s recently completed analysis suggests the cost would be more like $26-$41 million per year. To arrive at these estimates, CFI assumed the matching fund formulae and contribution limits of the Silver bill and applied them to the actual donors in the elections of 2010 and 2012.

The CFI analysis assumed that all donors who gave in each election would continue to give the same amounts under the new system – but only up to the new contribution limit. To average the cost between a gubernatorial and midterm election, the analysis includes one election for statewide officials (2010) and two elections for the legislature (2010 and 2012). It then assumed four different scenarios, represented in the table below. The two variables producing the four scenarios have to do with the rules for contested primaries, and the presence or absence of new donors in the system.

The Silver bill would allow higher contribution limits and more public funding for a candidate who is challenged in a primary election than for one who is not. This results in two pairs of scenarios. For one, we assume a status quo in which only the few candidates who were actually challenged in 2010 and 2012 would continue to be challenged under the new system. Under the other scenarios, we assume a substantial increase in primary challenges. By definition, this assumption would mean that the rules were bringing new candidates into the system. Obviously, we have no idea how many these might be. (Many incumbents presumably would still be unchallenged.) If we assume arbitrarily – and generously – that half of the current candidates would face a primary challenge under the new rules, we can estimate the cost by treating all of the existing general election candidates as if they would be covered the under rules for contested primaries. This should produce overly high estimates of the new program’s cost.

Second, any estimate will be sensitive to the number of donors assumed. The table includes two estimates of the number of donors. Under one, we calculate that only the donors who gave in 2010 and 2012 will continue to give under the new system. This produces a low estimate for the cost of public matching funds. The second assumes the program’s incentives successfully bring new donors into the system. To put a dollar figure on this, we make the optimistic assumption that each candidate doubles the number of his/her donors, with each new donor giving $50.

Table 1. The Cost of a Public Matching Fund System for New York State Elections Includes the Four-Year cost for all Statewide and Legislative Candidates

The above table shows the CFI estimate under each of the four scenarios. If no new donors are brought into the system, the cost would be $26 million - $30 million per year. This would average to $1.34 - $1.55 per person per year. With new donors, the cost would be $33 million to $41 million per year. Under these more expensive scenarios, therefore, the average cost for each of New York’s 19.5 million residents would be between $1.70 and $2.08 per year, with the higher figure including generously optimistic assumptions for both of the key variables.

HOW THE CANDIDATES WOULD FARE

Under the Silver bill, candidates would lose some of their current money because the contribution limits would be lower. But they gain money from the new public matching funds. Incumbents who are asked to vote for such a program obviously would want to know whether combining the two provisions would leave them with less money to compete. As the following summary table indicates, almost all Assembly candidates would have ended up with more money, not less. So would most Senate candidates, but the number for the Senate would depend upon the final bill’s contribution limits.

The bill as introduced would impose $2,000 contribution limits on any candidate for any state office, but this would be doubled for candidates facing two contested elections (a contested primary as well as a general election). The bill also would impose a limit on the maximum amount of matching funds that a candidate could receive. That limit was $150,000 per election for the Assembly (or $300,000 combined for two contested elections) and $350,000 for the Senate (or $700,000 combined).

The following table mixes and matches the two provisions, showing how many candidates would have been net losers if all candidates had operated under the higher or lower contribution limits, with the higher or lower public funding cap. It shows the results with the actual donors of 2012, and with a doubling of the money from small donors.

Table 2. Number of 2012 Candidates Who Would Have Had Less Money With Public Matching Funds and Lower Contribution Limits Than They Actually Raised

As the table shows, the bill provides adequate public funds to assure that almost every Assembly candidate receives at least as much by substituting small donor matching funds for large contributions.
The bill is not as finely tuned for the Senate. By imposing the same contribution limits for all offices, the bill would have left more than one-quarter of all Senate incumbents (eleven Democrats and six Republicans) with less money under the proposed system than under the status quo. Most challengers and candidates for open seats would be ahead; only two would be behind.

To address this, the bill’s sponsors might want to vary the contribution limits across offices. The current Silver bill has the same limit for Assembly, Senate and all statewide offices. This need not be so. In 2011-12, thirteen states had the same limit for all offices, but nineteen had higher limits for statewide officials and six (including New York) had different limits for statewide office and each of the two legislative chambers. (Twelve states allowed unlimited contributions.)

New York’s Senate districts are approximately twice as large as its Assembly districts. One possibility might be to make the contribution limits for the Senate twice that of the Assembly’s. The Senate’s current limit is about 2.5 times the Assembly’s. A $4,000 limit for the Senate and $2,000 for the Assembly would still be about half of the current limit for each chamber. If the Senate’s limit was $4,000 instead of $2,000, almost all Senate candidates would find it advantageous to combine the new limits with small donor matching funds.

Attachments

Appendix 1: Candidates for NY State Senate in 2012Appendix 2: Candidates for NY State Assembly in 2012
Appendices 1 and 2 show: (a) the amount of Money Each Candidate Raised in 2012; (b) how much each candidate would lose as a result of the Silver Bill’s contribution limits; (c) how much new money each candidate would receive from public matching funds if the donors who gave in 2012 were to give again and no new donors entered the system; (d)how much each candidate would receive from public matching funds if the system did bring new donors into the system; (e) the net gain or loss to each candidate under the two public matching fund scenarios, as they are in the Silver bill; and (f) for Senate candidates, the net gain or loss with higher contribution limits and/or higher public funding caps.

The Campaign Finance Institute is a non-partisan, non-profit research institute. Statements of the Campaign Finance Institute and its Task Forces do not necessarily reflect the views of CFI's Trustees or financial supporters.